The fine print of the hastily-put-together debt ceiling bill passed by Congress and signed into law by Obama yesterday is still hazy. But the details that are emerging are worrisome. Here are 3 bad things about the Budget Control Act of 2011:
No. 1: debt ceiling raised by $2+ trillion
The U.S. federal government’s debt limit is immediately increased $2.2 to 2.4 trillion, the biggest explosion of debt in American history. Sen. Rand Paul (R-Kentucky), who voted against the bill, says the bill will add another $7 trillion to our national debt.
By this Christmas, 2011, US national debt will be $15 trillion — a sum that exceeds 20% of the entire world’s combined GDP (Gross Domestic Product) and 100% of America’s GDP. This is the same 100%+ debt-to-GDP ratio of the bankrupt European PIIGS (Portugal, Ireland, Italy, Greece, Spain). The only difference between the USA and the PIIGs is that there’ll be no
European Union Germany to bail us out.
No. 2: Cuts to defense
The law calls for $917 billion in spending cuts over a span of 10 years. But in contrast to the Boehner-GOP proposal, the cuts are no longer restricted to non-defense discretionary spending!
Discretionary spending is that part of the U.S. federal budget that includes everything that is not in the mandatory budget. The latter, mandatory budget, refers to entitlement programs required by law to provide certain benefits, such as Social Security and Medicare.
Discretionary spending in FY 2010 was $1.3 trillion, or 38% of total spending. More than half ($815 billion) was security spending, which includes the Department of Defense, overseas contingency programs and Homeland Security. Non-security spending was $491 billion, which was spent on such departments as Health and Human Services ($84 billion), Education ($64.3 billion), Housing and Urban Development ($42.8 billion) Justice ($27.6 billion), and Agriculture ($25 billion).
According to a Reuters article by Linda Stearn, August 2, 2011, almost all discretionary federal spending will face some cuts over the next 10 years, with defense spending taking a comparatively heavy hit of about $350 billion of the projected cuts.
No. 3: Super Committee can raise taxes & cut entitlements
More ominously still, the deal sets up a bipartisan 12-member congressional committee to find another $1.5 trillion in cuts. But the Super Committee is not restricted to just discretionary spending cuts! Instead, its menu is wide open and can include Social Security reductions or tax increases. If that committee fails to come up with at least $1.2 trillion in savings – or Congress doesn’t approve its recommendations by December 23 – automated cuts begin to get triggered. Those cuts would be deep, hitting Medicare and the military but sparing Social Security, Medicaid and a handful of other programs.
Remember the Republicans who voted for this bill. I’ll find out who they are and post their names in a post to come.
H/t beloved fellow Anon.